Ontario’s Trillium Benefit: A New Way to Help the Poor

About 3.5 million low- and moderate-income Ontarians this week are receiving their first Trillium Benefit, a provincial initiative that combines three quarterly tax credits into a new monthly payment.

The benefit, which includes the provincial sales, property and energy tax credits, was first announced in the 2011 budget and provides monthly payments of up to $113 for a single person, $142 for a single parent and $124 for a senior.

Designed to help households better manage their monthly expenses by providing the money earlier and more frequently than before, the benefit, worth about $2.4 billion annually, is the first outside Quebec to be paid monthly through the tax system to all low- and moderate-income people. Quebec’s monthly “Solidarity Tax Credit” was also introduced this month.

Until now, only seniors, the disabled and parents with children received monthly benefits through the tax system. And it is why some social policy experts say the benefit sets the stage for the introduction of a guaranteed annual income.

“It puts the delivery platform in place,” said John Stapleton, a retired social services ministry official who now advises government and community agencies on policies to ease poverty.

“The next step would be to increase the amount of money available,” he said. Stapleton encouraged the government to move to monthly tax credits and also appears in a finance ministry video explaining the new benefit.

The benefit is part of the province’s poverty reduction strategy, said Children and Youth Minister Eric Hoskins who oversees the province’s anti-poverty file.

“This approach is the same as the one we use for the Ontario Child Benefit, which has helped lift 20,000 children out of poverty,” he said in an email.

But not everyone welcomes the change.

Seniors have complained they need the provincial credits at tax time to help offset any federal taxes they owe.

And some on social assistance say they prefer the lump sum (worth between $900 and $1,500 depending on the size of their household), because it allows them to buy furniture, a computer or something else they couldn’t afford on their meager welfare incomes.

Finance Minister Dwight Duncan has said the government is working to provide payment options next year.

But in the meantime, Fionna Blair, 45, misses the annual payments she used to get before 2010 when the province began sending its tax credits quarterly.

“When I got the money in one chunk I was able to pay off bills or buy something to make my home a little more comfortable,” she said.

The Toronto woman who is unable to work due to mental health issues related to childhood trauma, struggles to live on $1,400 in Ontario Disability Support Program payments and special benefits. Her rent alone is $900 a month.

“I prefer choice. And I would opt for a single payment,” said Blair. “For me the monthly amount just gets absorbed into my monthly cost of subsistence.”

A monthly benefit delivered through the tax system is a better way to help people than welfare which carries such stigma, said Rick Eagan, of St. Christopher House, a neighbourhood centre that helps low-income people in the city’s west end.

“But I find single people seem to prefer an annual payment because it acts as a forced savings, while parents like to get the money monthly,” he said.

One of the side benefits of losing the lump sum tax credit is that it won’t be as easy for tax preparation companies to scoop a percentage of the money for payment, Eagan noted.

With no lump sum from which to pay these companies, low-income people have been flocking to community agencies that offer tax preparation services for free.

“We have seen a big increase in the number of people coming to us for this kind of help,” said Eagan, whose agency helped people claim more than $4.5 million in tax credits and refunds this year.

About 48 per cent of Ontarians eligible for the Trillium Benefit have opted for direct deposit and received their money on Tuesday. The rest are getting their cheques in the mail.

Provincial finance officials acknowledge it costs more to mail monthly cheques, but hope those costs will drop as more people to switch to direct deposit. By 2016, Ottawa, which issues the payments on behalf of the province, will no longer issue government cheques by mail except for those in remote locations or other exceptional circumstances.

To be eligible for the Trillium Benefit, Ontarians have to file a tax return every year, even if they have no earned income to report.

The federal GST credit of up to $65, will continue to be paid quarterly in July, October, January and April.